The Cost of Paying for Publicity & Social Media Endorsements

In a world of “gramming”, “sharing”, “tweeting”, “posting” and “liking”, endorsing a product or service is a lot easier that it used to be – sometimes, just a click away. After the unwanted attention Australia Post received for paying for social media endorsements, without disclosing their commercial agreement, the law surrounding paying influencers has been a hot topic of discussion.

Given the abundance and variety of social media as affordable and effective promotion outlets, businesses and brands are building commercial relationships with high-profile individuals, bloggers, Instagrammers, journalists and other media influencers, in order to gain credibility and popularity for their brand. Find out how the law reacts to these types of relationships and how to pay for endorsements within the legal boundaries.

Social Media Endorsements and the Law

Just because it is posted on social media, does not mean it is immune from legal ramifications. These days, the words of Instgrammers, Snapchat stars, lifestyle bloggers and other Internet personalities are taken as gospel. Social media outlets are a gold mine for promoting your brand, especially when it’s backed by influencers, like the Kardashians or Selena Gomez. It is important to be aware that the Australian Consumer Law (ACL) applies to online influencers in the same way as any other advertisement space.

Promoting a product or a service may attract the ACL by breaching the following sections:

Section 18 prohibits engaging in misleading or deceptive or conduct for commercial purposes; and

Section 29 prohibits making false or misleading representations for commercial purposes, including testimonials.

Therefore, where an influencer advertises your product or service by making untrue statements in order to entice customers, they are likely to be engaging in misleading or deceptive conduct. Similarly, if an influencer posts about their personal experience and satisfaction with your product or service without even having tried it, this too can be misleading or deceptive. In addition, the ACCC has produced a set of guidelines to assist businesses keeping within the boundaries of the law when engaging in influencers to advertise their brand.

Be Transparent about Commercial Relationships

There is no law against paying someone to promote your product or service. However, if an endorsement is likely to confuse the public as to whether the content was genuine or sponsored, this may be considered misleading conduct under the ACL. In order to avoid breaching the law, disclosing commercial arrangements with influencers is paramount.

Publishing Misleading Reviews

Reviews are not only misleading when they are factually incorrect, but also they may mislead consumers where it appears that they are impartial when, in fact, they are sponsored by the company itself. In effect, this means that any review posted by an influencer who has been offered an incentive to endorse the product or service should include a reference to the commercial relationship.

Omission of Reviews

Selectively removing or amending negative posts is considered misleading. Choosing what reviews should and should not be displayed manipulates the overall impression of your product or service and misleads consumers.

The ACCC warns businesses that it is their responsibility to monitor their social media pages, including the posts uploaded by influencers, and consumers in general, which the company knows or should know is false or misleading. The ACCC can require businesses to substantiate their claims or posts relating to their products or services and can take court action or issue an infringement notice where it identifies a breach of the law.

Case Study: Australia Post

In December 2014, Australia Post was caught by Australia’s consumer watchdog, the Australian Competition and Consumer Commission (ACCC) for paying Instagrammers to promote their services without disclosing the nature of their relationship to consumers. As a result, Australia Post had breached the ACL rules on online endorsements and reviews.

Australia Post argued that it was the responsibility of their talent management agency, Moda Creative, who managed the influencers, to verify that the appropriate disclaimer was evident with each endorsement. However, the ACL imposes the obligation on companies, which includes ensuring their agents are complying with the law. Australia Post was also found to have breached the ACL for removing negative posts when it was revealed that one of the influencers was deleting posts.

The Hashtag Hero

Cases like Australia Post should not deter you from using social media to promote your brand. Business owners should utilise all the resources they have to build their name and reputation, and social media platforms are often the most accessible, affordable and effective way of doing that. It may seem like splashing ‘paid advertisement’ across a post defeats the purpose of promotion, but a simple hashtag like #sponsored or #ad could save you from the ACCC’s watchful eyes according to the Interactive Advertising Bureau. This does not mean that you can bury the hashtag in the middle of a long post but if it is identifiable to a consumer, it should satisfy the disclosure requirements.

What Else Can Businesses Do?

Every business is different in one way or another. The appropriate steps to take in order to avoid a run in with the ACCC depends on the nature of your business and the way in which you operate. However, here are some general guidelines, which may assist you when engaging influencers to endorse your products or services:

Create a company policy for social media and any commercial relationships with influencers.

Ensure your staff, agents, marketing team and any other relevant individuals, are aware of the disclosure requirements for paid endorsements.

Include rules for users who post or upload content to your website in your website’s Terms of Use.

Regularly monitor posts and uploads on your website or any social media sites on which your products or services are referred.

Key Takeaways

When in doubt, disclose. At the end of the day, if you are transparent in your commercial relationships and follow the ACCC guidelines, you are likely to satisfy the ACL rules. LegalVision can assist you in ensuring you comply with the ACL in relation to your promotional practices. Get in touch with our specialist consumer lawyers on 1300 544 755.

Alexandra is a Bachelor of Arts and Bachelor of Laws graduate from Deakin University. She has a particular interest in intellectual property law, startups and all things creative. Alex has worked at KPMG in their tax team and in private legal practice, specialising in IP, family and commercial law.

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